Tax Credit Programs
Federal Low-Income Housing Tax
Credit (LIHTC) Program
Overview
The Connecticut Housing Finance Authority (CHFA)
administers the federal Low-Income Housing Tax Credit
(LIHTC) program for housing developments in the state of
Connecticut. The LIHTC program is contained within § 42 of
the
Internal Revenue Code
(26 U.S.C. § 42) as a tax incentive program to
stimulate investment in affordable housing.
The LIHTC program provides incentives for developers to
acquire, rehabilitate and or build low- or mixed-income
housing through the allocation of federal tax credits that
can be used to reduce a project’s federal taxes or sold to
corporations or investor groups to raise equity for a
project. The credits are purchased at a discount and
represent a dollar-for-dollar reduction of tax liability.
In Connecticut, the LIHTC program plays a vital role in
the creation and preservation of affordable rental housing
by increasing the funding available to eligible projects
that best meet the state's goals and requirements for
affordable housing. (See,
Qualified Allocation Plan.)
Follow the links below
to learn more about the LIHTC program.
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Who can apply for Low-Income
Housing Tax Credits?
Developers and owners of qualified low-income housing may
apply for Low-Income Housing Tax Credits.
Successful applicants:
- acquire, substantially rehabilitate, and/or
construct residential rental developments that provide a
percentage of affordable units for occupancy by
low-income individuals and families.
- assemble a development team (owner, development
consultant, management agent, contractor and architect)
that meets the experience and licensing requirements
established by CHFA.
- comply with
Section 42
of the Internal Revenue Code, regulations,
administrative documents, and all relevant material
published by the IRS.
Please note: Before applying, developers
are encouraged to seek the assistance of a housing
consultant, an attorney and/or an accountant to verify
compliance with all LIHTC program requirements.
What types of housing
developments are eligible to receive Low-Income Housing Tax
Credits?
In order to be eligible to receive Low-Income Housing Tax
Credits (LIHTC), housing developments must meet specific
criteria set forth in
Qualified Allocation Plan (QAP).
- Eligible developments must provide
residential low-income rental housing.
Projects that acquire, substantially rehabilitate, and/or
construct residential rental housing to be occupied by a
percentage of low-income individuals and families may be
eligible to receive LIHTC awards.
Conversely, hospitals, sanitariums, nursing homes,
retirement homes, mobile home parks, and life care
facilities (excluding certain Assisted Living proposals)
are not eligible for LIHTC.
- Projects must meet "Minimum
Set-aside" requirements
A "minimum set-aside" represents the lowest percentage
of a development's housing units that meet
HUD-defined low-income and rent restrictions
applicable to the geographic areas.
In order to be eligible for LIHTC, development owners
must agree to one of two “minimum set-aside” provisions.
- LIHTC 20-50 Minimum Set-asides - Very Low Income
Tenants
At least
20% of the development's units must be rented to
tenants earning no more than 50% of the
area median
income (adjusted for family size) as established by HUD.
The remaining units
may be rented at market rates.
-
LIHTC 40-60 Minimum Set-asides
At least 40% of the development's units must be rented
to tenants earning no more than
60% of the area median income
(adjusted for family
size) as established by HUD. The remaining units may be
rented at market rates.
This set-aside requirement remains in place throughout
the compliance period of 15 years and an extended use
period, which typically totals over 30 years.
What size tax credit is a
development eligible to receive?
The amount of tax credits a development is eligible
to receive under the Low-Income Housing Tax Credit
(LIHTC) program represents a fixed percentage of certain
costs of developing low-income housing and the number of
units that will meet federal rent and income targeting
guidelines. Other factors that are considered include,
but are not limited to, the amount and source of
financing available for a project.
Generally, new construction projects and substantial
rehabilitation projects may qualify for 9% Tax Credits, as
long as they are not funded with federal Tax-Exempt Bonds
and are otherwise eligible. On the other hand, projects
that involve acquisition and substantial rehabilitation
expenditures and are funded with Tax-Exempt Bonds may only
qualify for 4% Tax Credits.
A development receives all of the tax credit equity
during the construction period, while investors claim the
tax credits annually over a ten year period. The credits
are used to reduce federal tax liability on a dollar-for-dollar basis.
How do Developers apply for Low-Income
Housing Tax Credits?
Developers may apply for Low-Income Housing
Tax Credits by mailing or hand-delivering a completed copy
of the
Consolidated Application to:
Mailing Address:
Connecticut Housing Finance Authority
Attn: Tax Credit Department
999 West Street
Rocky Hill, Connecticut 06067-4005 |
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What is the application
deadline for Low-Income Housing Tax Credits?
The application deadline differs depending upon the type
of LIHTC being applied for:
- 9% Low-Income Housing Tax
Credits
There is a limited pool of 9% LIHTC. This
means that developers must apply during
CHFA-specified 9% LIHTC funding rounds and
be rated and ranked based upon how well
their projects meet the priorities and
selection criteria set forth in CHFA's
Qualified
Allocation Plan (QAP.) The top scoring
applicants (as judged by CHFA) are awarded
9% LIHTC.
To be included in the 2012 funding round,
all application packages must be received by
CHFA September 4, 2012 no later than 4:00pm.
- 4% Low-Income Housing Tax
Credits
4% LIHTC are allocated on a
non-competitive basis to
developments that utilize Tax-Exempt Bonds
as a component of their financing. Because
4% LIHTC are awarded on a non-competitive
basis, developers may apply for 4% LIHTC at
any time. Common practice is for developers
to apply for 4% LIHTC in conjunction with
Tax-Exempt Bond financing.
(See Also,
News and Announcements for "Notice of
Funding Availability" bulletins advertising
periodic Tax-Exempt Bond financing
opportunities.)
Is training available on the Low-Income Housing Tax Credit
program?
Generally, CHFA offers LIHTC
application overview sessions providing
information regarding the LIHTC Program
and Qualified Allocation Plan updates.
Prior to the funding round each year, overview sessions will be
posted under
News and
Announcements for Developers and Sponsors. Developers
interested in receiving email updates regarding the LIHTC
Program should contact
margaret.swiconek@chfa.org to be added to our email list.
What else
should developers know about
Low-Income Housing Tax Credits?
The following additional considerations and restrictions
apply to the LIHTC Program.
- Developments receiving Tax-Exempt Bond
financing may still be eligible for federal Tax
Credits.
Developments that receive Tax-Exempt Bond financing
from local, state or federal governments may still
qualify for 4 % LIHTC awards.
- A single development can qualify for
both 9% and 4% Tax Credits.
If a development includes building acquisition, it
may be eligible for 4% acquisition tax credits in
addition to 9% tax credits for rehabilitation
expenditures.
- Eligible developments must make a
minimum long-term commitment to provide low-income
housing.
LIHTC requires that a development provide
low income housing for a compliance period of 15
years starting with the first year of a building’s
ten-year credit period.
- Tax Credits allocated to developments
must not exceed the amount necessary to assure the
development’s feasibility.
The housing credit dollar amount allocated to a
building that is a part of a qualified low-income
housing project must not exceed the amount CHFA
determines is necessary for the financial
feasibility of the development throughout the
compliance period.
- The Tax Credit Period begins when a
building is placed in service or the next year.
Under LIHTC, the credit period of ten taxable years
for any building that is a part of a qualified
low-income development begins on the taxable year in
which the building is placed in service, or the
succeeding taxable year if the taxpayer chooses.
- Ten percent of all 9% Tax Credits are
reserved for non-profits.
Under LIHTC, ten percent of the tax credits
available in Connecticut are reserved exclusively
for developments sponsored by non-profit
organizations. Applicants under the non-profit
set-aside will be rated and ranked only against
other non-profit applicants.
Questions?
Contact CHFA.
Please direct questions and comments related to tax
credit programs to the Tax Credit Department.
Mailing Address:
Connecticut Housing Finance Authority
Attn: Multi Family Underwriting
999 West Street
Rocky Hill, Connecticut 06067
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Additional
Information
The following files and documents are related to the
Federal Low-Income Housing Tax Credit Program
| Related Documents |
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| File | Size | Type | CHFA/DECD Consolidated Application Instructions
Downloading/Unzipping Instructions - These files contain instructions on how to save, unzip, and open the Consolidated Application. Users who are unfamiliar with the concepts of "zipping" and "unzipping" files should read this document pior to downloading the Consolidated Application. | 15K | pdf |
| CHFA-DECD Consolidated Application Version 4.0
Released November 18, 2011. This application is used by Multifamily Rental Housing Developers to apply for funding from CHFA and/or DECD. This version of the application will be required for all applications received after January 1, 2012.
Download this file and extract its contents onto your computer. Once extracted, open the "Consolidated Application - Start Here" pdf file.
(PLEASE NOTE: This file is stored in "Zip" format. Older versions of Windows may need a separate utility to open/extract zip files. WinZip or IZArc can be downloaded free at http://izarc.org.) | 4802K | zip |
| 2011 LIHTC Award List
2011 LIHTC Award List - This chart lists the developments which received 2011 9% Federal Low-Income Housing Tax Credit Awards. | 27K | pdf |
| 2011 Qualified Allocation Plan
Updated August 2011. This is the Qualified Allocation Plan (QAP) for Connecticut as required by the federal Low-Income
Housing Tax Credit ("LIHTC") Program for the allocations of housing tax credits to promote an expansion of low-to moderate income rental housing in the state by establishing the guidelines and procedures for the acceptance, scoring and competitive ranking of LIHTC applications and the administration of the program. | 6819K | pdf |
| 2012 Draft Qualilfied Allocation Plan (QAP) Amendments for Public Comment
At its December 15, 2011 meeting, the CHFA Board of Directors approved the draft 2012 QAP for public comment. The 2012 QAP will be utilized for all LIHTC applications received in 2012, including those applying in September 2012 for the award of 2013 9% Low-Income Housing Tax Credits.
A summary of the points amendments is provided for reference.
| 671K | pdf |
| 2012-Draft Amendments to the Low-Income Housing Tax Credit Procedures for Public Comment
At its December 15, 2011 meeting, the CHFA Board of Directors approved amendments to the Low-Income Housing Tax Credit (LIHTC) Procedures for public comment. | 73K | pdf |
| 9% Low-Income Housing Tax Credit - Applicant List 2011
A listing of 9% applicants for the 2011 round. | 27K | pdf |
| CL&P Certified HERS Rater List
This document may be used by development teams seeking Certified HERS Raters. | 393K | pdf |
| Energy Efficiency Effectiveness Form
This form is for development team use in submitting energy conservation data for financing applications. | 23K | xlsx |
| LIHTC - 2009 Allocations
This chart lists the housing projects that received 2009 federal Low-Income Housing Tax Credits. | 113K | pdf |
| LIHTC - 2010 Allocations
This chart lists the developments which received 2010 9% Federal Low-Income Housing Tax Credits. | 12K | pdf |
| LIHTC - 2011 Application Overview
This is the LIHTC Application Overview presentation used for the sessions held on February 7th and February 10th, 2011. | 2731K | ppt |
| LIHTC – Cost Certification Submission Form
The LIHTC Cost Certification determines the amount of recognized eligible basis and also determines whether the initial tax credit allocation amount still qualifies for a housing project. | 94K | doc |
| LIHTC - Glossary of Terms
This is a glossary of terms related to the Low Income Housing Tax Credit (LIHTC) Program, updated October 2010. | 108K | pdf |
| Low-Income Housing Tax Credit Procedures
At its February 24th, 2011 meeting, the Connecticut Housing Finance Authority's Board of Directors approved the amended Low-Income Housing Tax Credit Procedures | 57K | pdf |
| March 15, 2011 Update. Appendix 2 - LIHTC General Information
Description of Low Income Housing Tax Credit (LIHTC) Program and general information on completing the application. | 142K | pdf |
| Section 3 Summary Report - Economic Opportunities for Low and Very Low-Income Persons
Submit one (1) copy of this report to the HUD Headquarters Office of Fair Housing and Equal Opportunity, at the same time the performance report is submitted to the program office. The Section 3 report is submitted by January 10. Include only contracts executed during the period specified in item 8. PHA/s/IHAs are to report all contracts/subcontracts. | 158K | rtf |
| State Bond Commission - Multifamily Rental Housing Underwriting Review Guidelines for Mortgage Loans
This document is applicable to all entities seeking an allocation of Private Activity Bonds ("PAB") from the Office of Policy and Management ("OPM"). OPM refers to the Connecticut Housing Finance Authority ("CHFA") for review of development proposals with the below guidelines | 165K | pdf |
| Very Low Income (VLI) Construction Status Report
This form is to be used to report accomplishments regarding employment and other economic opportunities provided to low and very low-income persons and must accompany each monthly request for Construction Advance. | 52K | xls |
| Very Low Income Construction Employment - Policy Statement
This form is to be used to report accomplishments regarding employment and other economic opportunities provided to low and very low-income persons and must accompany each monthly request for Construction Advance. The information will be used to monitor compliance with the VLI Construction Employment Policy established by Connecticut Housing Finance Authority ("CHFA"). This form applies to projects funded by CHFA multifamily mortgages and/or Low-Income Housing Tax Credits ("LIHTCs") that have $1 million or more in "Hard Construction Cost". For the purposes of this form, VLI means families (including individuals) whose incomes do not exceed 50 percent of the Area Median Income of the location of the development.
| 245K | pdf |
| WAIVER OF LIEN
Material or Labor Waiver of Lien | 39K | doc | | File | Size | Type |
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